[GRP Funding]

I'm with John and Andy on this one.

[J.Celifarco]

I agree no way will stacking become the norm for all companies. There will always be the big players that will not stack. Because lets be real, is paying 25+% of your gross sales towards cash advance debt really a good or sustainable idea for most businesses? The established players keep payments low for a reason. Stacking only appears to be the norm because as new players enter the game they have to stack in order to get market share. Cant beat an ODC MCC or CAN rate? Lets stack on it instead. That is why some of the newer stackers are now doing longer terms, because they have no other way to gain market share. They will soon learn why no one else is doing 6 month 3rds at 1.40, because add in default rates and lawsuits and its not such a profitable business anymore....

Over the past year a lot of new companies have opened and everyone is trying to find their place in the industry. To speed up the process they tried to gain market share quickly by stacking because it is easier then looking for quality 1st position deals or waiting till a merchant qualifies to pay off a current balance. AS these deals start to go bad and I think we all know they will when you are taking 25%-30% of a merchants gross sales, thats when all these new companies will be in trouble. I think you will see a lot of these companies leave the industry as fast as they came in. I just don't see how a business model based solely on stacking can stay viable when you factor in both bad debt and the cost law suits

[Chambo]

Over the past year a lot of new companies have opened and everyone is trying to find their place in the industry. To speed up the process they tried to gain market share quickly by stacking because it is easier then looking for quality 1st position deals or waiting till a merchant qualifies to pay off a current balance. AS these deals start to go bad and I think we all know they will when you are taking 25%-30% of a merchants gross sales, thats when all these new companies will be in trouble. I think you will see a lot of these companies leave the industry as fast as they came in. I just don't see how a business model based solely on stacking can stay viable when you factor in both bad debt and the cost law suits

when the merchant who collapses under 4 positions has to explain to the IRS why they cannot pay their tax obligations ("These cash advance companies are taking all of my revenue! There's nothing left!") is when stacking will stop immediately

[Zach]

Stacking will exist until either:

A) Stackers are sued into the ground

or

B) Regulation hits our industry

Until then, stackers are going to make some big bucks on the coattails of larger firms (while also leveling the playing field by lowering the larger firms yield/increasing their defaults).

[RichardGerard]

Evolution will cause stacking to end. When Funders stack clients that have personal sub 600 FICO scores, and stand behind 4 other advances, what leverage do they really have? The client can file for Corporate Bankruptcy and the Funders will be left with little more than threats and documents that have a 'confession of judgement.' If the client is 'judgement proof' what can be done?? If their personal credit is already poor these businesses have literally nothing to lose by defaulting.

Once Funders feel the sting of this a few times, their 'stacking model' will change...

[CASHCASH]

also this
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Anyways my point is that stacking will keep happening as long as there is money to be made doing it.

[J.Celifarco]

as the law suits and bad debt keep ramping up there wont be money to be made

[MCAVeteran]

Are merchants being sued to for breach of contracts? Or just the stackers for tort?

[Natan]

As most of you have mentioned, defaults and poor UWing will be a larger deterrent to "stacking" than lawsuits, at least until the industry develops into larger market. But the profits and business model of levering up borrowers for a quick profit at the expense of primary lender risk exists in other markets as well, so I wouldn't discount the practice to strongly. Specifically, defaults will be primary deterrent of companies from stacking, as will bankruptcy, that being said, there is money to be made so merchants will keep getting stacked.